Rethinking the Export‐​Import Bank

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The Export‐​Import Bank of the United States (Ex‐​Im Bank) wascreated in 1934 as an independent federal agency operating under arenewable congressional charter. That charter most recently expiredon September 30, 2001. Since then, the Ex‐​Im Bank has beenoperating under a series of continuing resolutions set to expire onMarch 31, 2002.

The Ex‐​Im Bank is a Great Depression‐​era agency that has littlerelevance in an era of increasingly open and sophisticated globalmarkets. Subsidized export credit does not noticeably affect theoverall level of trade, does not “improve” the U.S. trade balance,and has no discernable net impact on the number of jobs in the U.S.economy.

The Bank provides financing to countries that do not havetrouble obtaining credit and, in many cases, merely displacesprivate investment by funding ventures that would otherwise havetaken place. Moreover, the vast bulk of the Bank’s financing goesto very large corporations that do not need handouts fromtaxpayers.

Despite the tiny percentage of exports backed by the Ex‐​Im Bank,U.S. exporters have been demonstrating world‐​beating performance,proving that they do not suffer from a tilted international playingfield. Only a third of Ex‐​Im Bank financing requests even allegethat they are in response to subsidized foreign competition, andfar fewer cases are confirmed. That suggests that the Bank couldimmediately curtail its lending without undermining its statedmission to counter foreign‐​subsidized competition.

Ultimately, however, U.S. policy should be consistent with thegoal of maintaining a prosperous national economy as opposed tobenefiting particular industries and firms. The Ex‐​Im Bank, as acorporate‐​welfare agency, should thus be closed down.

Aaron Lukas and Ian Vásquez

Aaron Lukas is a policy analyst at Cato’s Center for Trade Policy Studies. Ian Vásquez is the director of Cato’s Project on Global Economic Liberty.